Exactly. A lot of people don't remember domain names anymore, they remember the words they need to type into Google in order to bring that site up as the top link.

E.g., if they want to get to Dell's website, rather than typing "dell.com" into the URL field, they type "dell" or "dell computer" into the search box and then click on the first result.

Oddly enough this relates to all the domain squatters out there. If you misstype something into the search bar you don't know what you get, but by clicking on the first link in Google you are taken the to the "reputable" site.

So a reputable DNS service that did this automatically would be a direct threat to Google.

You're also thinking too web-centric. DNS is not only used by web-surfers to construct URLs in their browsers. Things that make sense from a 'how to I find this webpage' sense do not make sense from a 'how does my non-web client contact the non-http server' sense.

IT ALSO BREAKS THE DNS.

Here is the difference between what Google will know:

User A: Google DNS: search for dell, dns lookups; dell.com, chat1.us.dell.com, checkout.dell.com

User B: Non-Google DNS: search for dell

For a large slice of Internet hosts, Google is already getting fine-grained data on what pages you're hitting.